Factory overhead, also called manufacturing overhead or work overhead, or factory burden in
American English
American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of variety (linguistics), varieties of the English language native to the United States. Currently, American English is the m ...
, is the total cost involved in operating all production facilities of a
manufacturing
Manufacturing is the creation or Production (economics), production of goods with the help of equipment, Work (human activity), labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector ...
business that cannot be traced directly to a
product
Product may refer to:
Business
* Product (business)
In marketing, a product is an object or system made available for consumer use; it is anything that can be offered to a Market (economics), market to satisfy the desire or need of a customer ...
.
It generally applies to indirect labor and
indirect cost
Indirect costs are costs that are not directly accountable to a cost object (such as a particular project, facility, function or product). Indirect costs may be either fixed or variable. Indirect costs include administration, personnel and security ...
. Overhead also includes all
costs
In production
Production may be:
Economics and business
* Production (economics)
* Production, the act of manufacturing goods
* Production, in the outline of industrial organization, the act of making products (goods and services)
* Production ...
involved in manufacturing with the exception of the cost of
raw materials
A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods
In economics
Economics () is the social science that studies how people interact with value; in pa ...
.
References
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Management accounting